Many students leave university with a large amount of debt, but some property experts suggest that investing in the buy-to-let market could result in paying off a student’s debt after they leave university.
Due to rising tuition fees and the cost of living, many students leave university with several thousand pounds of debt.
As reported in a September 2016 article by Yahoo! Finance, estate agent House Simple has calculated that if a student’s parents invest in a buy-to-let property while their child is at university, when the student graduates, the profit on selling the house can be used to repay much or all of the student debt.
An example the estate agent gave is a house in Manchester bought for £147,000. House prices in Manchester have risen over three years by £30,108, and this increase will pay for course fees debts of £9,000 a year on a three-year course.
Mark Dorman of Yahoo Finance highlighted 10 university towns where house prices have risen enough over the last three years to significantly cover student debt. These are Manchester, Leicester, Coventry, Birmingham, Norwich, Portsmouth, Southampton, Cardiff, Loughborough, and York.
If the child lives in the property, they could live rent free, with other student(s) in the house paying rent that could cover the commercial mortgage on the property.
Alex Gosling of House Simple said:
“For those parents fortunate enough to be able to afford a second property, there could be a way to give your offspring a debt-free start in life.”